Martin Salter: On Friday, MPs and councillors of all parties and local military historians will gather to take forward plans to provide a permanent memorial to Trooper Potts, Reading's only recipient of the Victoria cross, which he won at Gallipoli in 1915 in an act of outstanding courage. Will the Prime Minister, to whom I have written on this subject, offer a message of support for our endeavours to mark forever the gallantry of this truly local hero?

Gordon Brown: I hoped that we would find in the right hon. Gentleman's response more consensus than we appear to have discovered. First, let me advise him not to draw conclusions too quickly about the nature of the citizen who was arrested for the Detroit incident. We do not have the full information that he suggested we had about the radicalisation in the United Kingdom; nor do we have all the information about the individual's activities in Yemen. That is part of the continuing investigation. I think that drawing conclusions immediately is both premature and dangerous.
	It is a fact that we have excluded more than 180 people from our country on grounds of national security since 2005, and that we have excluded more than 100 individuals on grounds of unacceptable behaviour. Since July 2005, eight individuals have been deported on grounds of national security, and a further eight have made voluntary departures. So we take action when it is right to do so, and on the proscription of organisations, we take action when we have evidence that will stand up in a court of law. Decisions on proscription must be based on evidence that the group concerned is involved in terrorism as defined in the Terrorism Act 2000. It is not a party-political decision that is being made, but a decision on legal grounds that can be challenged in the courts. That is why the decision on Islam4UK was made in the way in which it was made, and that is why we have been careful in relation to what has happened over the organisation called HuT.
	Let me say something about body scanners and what happened in Amsterdam. We are investing a huge amount of money in trying to develop the most sophisticated techniques for identifying materials that are held in people's bodies when they go through a search. We cannot be absolutely sure that the scanners we use at the moment are foolproof; they are the best we have at the moment, but we will continue to invest further in them. The point I am making today is if the UK invests in scanners, it will be necessary for other countries also to develop these sophisticated techniques so that we have protection not only in our country's airports, but in the airports from which people travel to our country.
	Let me deal with e-Borders, which involves the holding of data about people. I am grateful if the Leader of the Opposition is saying that he now withdraws his objections to the holding of such data because it is an essential part of the national security effort that we are going to carry out in future months. Through e-Borders, we have the possibility of getting information 24 hours in advance of a passenger's flight into the UK, of being able to check that individual against the watch list and of then deciding whether that individual should be allowed to fly or should be subject to enhanced searches. That is a major advance that is going to happen during the course of this year as a result of the huge investment we have made in e-Borders.
	As far as international co-operation is concerned, the Yemen conference is a necessary means by which we can signal to the people of Yemen that the international community is prepared to support them in their efforts against al-Qaeda. I thought it right, and so did the President of the USA, to bring people together on the eve of the Afghan conference to signal the importance we attach both to Yemen taking action against al-Qaeda and to supporting those people in Yemen who are fighting these terrorist groups.
	As far as announcements made over Christmas are concerned, it is the practice for us not to comment on security information and that will continue to be the practice that is always followed in future. The Government's policy is absolutely clear about that. I do think, however, that we should look at the wider picture here today and I am sorry that the right hon. Gentleman has not drawn himself into this debate. The counter-terrorism strategy we need starts from what we do in the UK by securing our borders. It means having enhanced co-operation with the security agencies of other countries at all times, and it means that the de-radicalisation work we are carrying out goes on not simply in Britain but in other countries throughout the world to expose the extremists and to support the moderates and reformers. It leads us to take action in the Afghan border area to make sure that al-Qaeda cannot again gain a foothold in Afghanistan that would allow the Taliban to get back into power. I would have thought-I hope and I continue to hope-that there would be complete consensus in all parts of the House on these issues.

Nicholas Clegg: I thank the Prime Minister for his statement. The changing and evolving threat to Britain's security not only calls for constant vigilance, but demands regular review and debate in the House. The Prime Minister can always count on the support of those on the Liberal Democrat Benches in introducing proportionate and well thought through measures to reduce that threat, while of course protecting the traditional liberties of the British people.
	I particularly welcome the part of the statement about increased joint working with our European and other allies; in a globalised world, such European co-operation is vital to tackle any threat. That is why I have always advocated more, not less European co-operation in this area; our basic safety depends on it. I also welcome what the right hon. Gentleman said about the upcoming UN conference to discuss approaches to the situation in the Yemen and the horn of Africa; the joint working of our intelligence agencies to identify and combat threats at the earliest point at which they emerge; and the extension of the e-Borders programme, which is vital if we are to gain the information we need about people coming into and leaving the UK.
	If I understand it correctly, the Yemeni authorities claim that there are only a small number of hard-line al-Qaeda supporters in the country. Will the Prime Minister tell us how that small number of people will be targeted in order to ensure that we do not inflame moderate opinion in Yemen? Does he agree that the greatest challenge is to isolate and marginalise al-Qaeda supporters in the horn of Africa rather than take steps that will have the unintended consequence of boosting their support in this fragile region?
	The Prime Minister will know that Liberal Democrat Members believe it is vital to get right the difficult balance between security and liberty and that Government efforts in the past often got that balance wrong. This week, the court ruling on compensation for those given control orders has surely put another nail in the coffin of this failed system. As the former Home Secretary, the right hon. Member for Airdrie and Shotts (John Reid) said in respect of these orders, they have got holes all through them. Will the Prime Minister now accept that control orders do not work and will he agree not to renew them when they expire in March? Will he focus his intentions instead on ways of making it easier to prosecute terror suspects in our courts?

Gordon Brown: But science expenditure has doubled over the past 10 years, and the security Minister, Lord West, has asked companies around the country to work with him on developing new measures and new technologies that can deal with the detection of exactly what that the hon. Gentleman is talking about. Therefore investment has been made, and we are prepared to make the investments that are necessary. I ask him to look at the overall picture of science investment in this country, and at Lord West's invitation to companies in this country to be involved in developing the new technology. In fact, it is Smiths Industries, one of the British companies, that is developing the border scanner, and it is doing so with great distinction.

Denis MacShane: Is the Prime Minister aware that Mr. Azzam Tamimi, a preacher of hate who has boasted on the BBC about his support for suicide terrorist bombing and hatred of Jews, has been invited to speak on the university of Birmingham campus? Professor Eastwood, the university's vice-chancellor, defends that by saying that it is a matter of freedom of expression. Does the Prime Minister agree that freedom of expression, which is vital, is not the same as providing a platform for hate? We have to shut down those incubators of hate against our values and against the Jewish people?

Jeremy Browne: The lead amendment in the next group, amendment 4, stands in my name and that of my colleagues, so I may take the opportunity then to speak slightly more broadly about clause 1 given that we are not having a stand part debate. At this point, I will limit myself briefly and narrowly to amendments 1, 2 and 3.
	I share the views of the Conservative spokesman in two regards. First, as was discussed on Second Reading, the Bill is inherently flawed and there are all kinds of problems with it. Just over a week ago, I took part in a radio debate with a Labour MP who, when I raised the issue of the deficit, said, "Of course we, the Labour party, are serious about the deficit. We're legislating to reduce it-how much more serious can one be than that?" She appeared to believe that that was a sensible argument to advance, and it is, essentially, the root cause of the Government's problems-their belief that they can solve a financial problem by passing a law saying that they have solved it even if they are not taking the necessary financial measures to address the difficulties that they find themselves in. That is the inherent flaw in the Bill, and what makes it so utterly preposterous.
	However, given that we are where we are, and that the Government, despite the complete lack of enthusiasm and support from their own Back Benchers, are determined to plough on with this Bill in the final days of this Parliament, we might as well, as a responsible Opposition party, try to save them from the most masochistically bad parts of it. One of those parts relates to a point that has been raised by the right hon. Member for Wokingham (Mr. Redwood) and others. Why would the Government wish to bring in legislation that prevents the operation of the automatic stabilisers, which we all accept and which the Prime Minister routinely boasts about, or champions, in relation to Government intervention to protect some of the most disadvantaged people in society? Why would they wish to impose on themselves a straitjacket that prevents such measures from being implemented to help the people who are hit hardest in a recessionary environment? That is not only an unintelligent position to take but, potentially, a very socially divisive one. It seems to Liberal Democrat Members that it is worth specifying that, even if one accepts the basic premise of the Bill that we should ourselves with the structural element of the deficit. Therefore, we would support the hon. Member for South-West Hertfordshire (Mr. Gauke) were he to press the amendment to a Division.

Andrew Tyrie: There is an Alice in Wonderland quality about the Bill, and particularly about clause 1. One particular passage from that book is apposite. I shall not linger on it for long, but it is the passage in which a large white rose tree in the garden is being painted red. Alice goes up to the gardeners timidly and asks why they are painting the roses. The answer comes:
	"Why the fact is, you see, Miss, this here ought to have been a  red rose-tree, and we put a white one in by mistake; and if the Queen was to find it out, we should all have our heads cut off".
	I shall come later to the penalty for misbehaviour under the Bill. As you may remember, Sir Alan, nobody does get their head cut off in "Alice's Adventures in Wonderland" because there are in fact no real penalties, as there are none in the Bill. All that will happen is that Government Members will find themselves sitting on this side of the House quite shortly. The Bill has failed to convince the public of its intended purpose, perhaps because it will change nothing and cannot have any meaningful impact because it is just rhetoric. It is designed to create an impression that something has changed when nothing has, just like the coat of paint on those roses, and to make a Government who are bereft of ideas look as though they had a meaningful exit strategy from the economic crisis.
	In fact, clause 1 is even more pernicious than that. It begins with a statutory commitment requiring the deficit to be lower in each year than in the previous one. That is a very dangerous notion, as my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) and my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out. Of course, having a policy to reduce the deficit is sensible, and it is Labour's failure to provide such a policy in the detail required to get us out the fiscal hole we are in that has so troubled analysts. It has also troubled the Treasury Committee, which berated the Government only a few weeks ago for their failure to add greater detail and clarity to the plan for cutting the deficit. However, having a statutory requirement to reduce the deficit is truly ridiculous, as my hon. Friend and my right hon. Friend illustrated.
	What will happen if there is another downturn during the five years covered by the Bill? Just as the recession or downturn starts to bite, the Government will be required to tighten fiscal policy even further, sucking yet more demand out of the economy. The effect of the clause will therefore be to deepen that recession or downturn. We will be implementing the economic policy of President Hoover-at least, that is what he was criticised.
	The effect of the clause is to tear up the centrepiece of our economic orthodoxy of recent decades. As my hon. Friend the Member for South-West Hertfordshire pointed out, it will mean the abandonment of the economic stabilisers, which allow tax receipts to fall and public expenditure to rise in a recession. I shall come to the structural deficit in a moment.

Andrew Tyrie: Of course the Bill is gibberish, and it is very difficult to examine clause 1 without examining clauses 3 and 4. We will come to clause 4 later, but it is worth my reading out the relevant part of it in response to my hon. Friend. It states that the fact that
	"any duty in section 1...has not been, or will or may not be, complied with does not affect the lawfulness of anything done, or omitted to be done, by any person."
	What kind of serious statutory requirement provides such a get-out clause?
	To return to the structural deficit, if the economy were in structural balance, the stabilisers could be allowed to operate over the cycle, providing deficits in years of below-trend growth and surpluses in years of above-trend growth. Let us set aside for the moment the ghastly truth that by the Government's own estimate, three quarters of the unprecedentedly large deficit-by the way, it is the largest in peacetime history, as far as I know-was caused by Labour's mishandling of the public finances. That is to say, it is structural. Clause 1(1) dismantles the stabilisers, which is why amendment 1 is absolutely essential if we are to make any sense of the Bill at all. It would enable it to address the right measure, which has to be the structural deficit.
	Of course, restricting the application of the Bill to the structural deficit might require an alteration of the targets in order to get the same level of desired reduction. I hope that the Government will take it for granted that the Opposition accept the need for that, and that when the Economic Secretary speaks, we will not hear the absurd objection that that somehow implies that we will be less tough on the deficit than the Labour Government.
	It is clear to me that we cannot leave the Bill as it is, if it is to be taken seriously at all. As it stands, if the UK had another downturn we would be plunged into a downward spiral of economic decline. Nobody believes that any Government would allow that, so something else would be done. None of the major economies have made the mistake that the Bill does in any downturn in recent history. They have all remembered the lessons of the 1930s, yet incredibly, the Government are suggesting that we forget those lessons if there is another downturn in future.
	My hon. Friend the Member for South-West Hertfordshire has already pointed out that when the Chancellor was challenged on exactly that point on Second Reading-I took a look at  Hansard and I believe he was challenged three times, although it might have been twice-he repeated the same phrase each time: "We will come back". I presume that he meant "We will come back to the House", and that that is a euphemism for saying that if the Bill were tested in a downturn, he would repeal it and scrap it. As I tried to say at the time, he clearly does not believe in his own Bill. The first time that it is tested, he wants to put it into the shredder.
	Of course, I think I know the answer that is really at the back of the Chancellor's mind-he thinks that the Bill is nonsense. The Economic Secretary is an intelligent man and I am pretty sure that he, too, thinks it is a load of nonsense. We are all here debating it because the Prime Minister wants to continue with the strategy that served him well for many years in opposition and for some years as Chancellor: announcing good intentions, putting them on the statute book and taking credit with the public for doing that.
	Clause 1 is only one provision in a decade's worth of such Blair-Brown speak, of which there is a huge volume. The  Financial Times commented on that recently, stating that that
	"approach to managing change seemed to be based on a mythical version of heroic leadership, popularised by some of the management magazines. 'Announce it and it will happen'".
	That is exactly what we have here: announce that we will reduce the deficit, and somehow, magically, it is supposed to happen. It will not necessarily happen. Much more detail on the measures required to plug the deficit is needed. The cancellation of the spending review in the pre-Budget report is the crucial giveaway. Failure to produce detail is crucial to the collapse of confidence in Labour's economic policy.
	The Bill was designed to be a legislative distraction and, as my right hon. Friend the Member for Wokingham said, the clause is its kernel. However, this time, the Prime Minister's luck has run out. Far from distracting the commentators and the public, the measure simply confirms what many Members of Parliament have known for a long time-Labour's economic policy is bankrupt of ideas. When a Government run out of ideas, they should go.
	It is an open secret that it took all the combined efforts of the deputy Prime Minister and the Chancellor to persuade the Prime Minister to make at least some attempt to give an indication of the public expenditure challenge facing the country. The Prime Minister apparently insisted on the fig leaf of a measure, of which clause 1 is a crucial part.
	The Prime Minister seems, for the most part, to have retreated into a parallel world, articulating the mantras that worked in his younger days, such as "Tory cuts" and "Labour investment", as well as other nonsense. That is the Prime Minister's looking-glass world, where political battalions-an accumulated surplus from the 1990s-remain on the table to move around. Unfortunately, the accumulated surplus has all gone-it has all been spent.
	The economy is in crisis, the Government are in crisis and Parliament is in crisis. At the heart of each crisis is the sort of legislation that we have seen time and again; it is embodied in clause 1. Such legislation makes the public cynical-even more cynical, if possible, than they are already are about politicians. People do not need to know economics; they need no more experience than managing their pocket money to know that clause 1 and the Bill are content free.
	Content-free legislation makes this place worse off. It has the same corrosive effect as unfulfilled manifesto promises. However, the Government have an appetite for it: we have had the Child Poverty Bill, the Climate Change Bill-with even more absurd targets-and now the heart of economic policy is to be subjected to the same treatment.

William Cash: I am pleased to follow the excellent speech of my hon. Friend the Member for Chichester (Mr. Tyrie), and those of all other Conservative Members who have spoken so far. We are talking a great deal of sense and seeking the truth about the fiscal irresponsibility that has permeated the Government's programme since 1997 but has now come home to roost.
	I, too, will quote from Lewis Carroll:
	"When I use a word, it means just what I choose it to mean... The question is... which is to be master-that's all."
	That is said to Alice. We have a perfect illustration of that in the Bill, not only in all the examples that my hon. Friend so cogently gave of the hypocrisy that lies behind the attempt to make us fall into a trap, which was sprung the wrong way from the Government's point of view, but because, as I said on Second Reading, at its heart is a travesty of the truth or an inability to identify the truth about net borrowing.
	My right hon. Friend the Member for Wokingham (Mr. Redwood), my hon. Friend the Member for Braintree (Mr. Newmark) and I repeatedly raised the matter on Second Reading because it is impossible to form a judgment about what constitutes public sector net borrowing or the deficit. I entirely endorse amendment 1 to include the words "structural element of". Such judgments cannot be made unless one knows what public sector net borrowing, expressed as a percentage of gross domestic product, means.
	Clause 5 states that we will be given a definition in the code for fiscal stability, which was produced in 1998. It has taken the Government from 1997-98 to the present day to undermine our finances completely. Moreover, if one examines all the golden rules, the nonsensical stability and growth pact and its application, and the criteria under the Maastricht treaty for public expenditure, and tries to form a calculation about what our economy is and what our debt levels are, one simply cannot make any responsible decision in the absence of a proper definition of public sector net borrowing. That completely undermines the purpose of the Bill.
	It is nonsensical to introduce a Bill on fiscal responsibility without defining net borrowing. It is rubbish. The explanatory notes refer to the golden rule, the second fiscal rule-the sustainable investment rule-and I ask the Economic Secretary to acknowledge the nonsense that all that represented in the first place, and the complete failure even to fulfil the criteria that the Government set for themselves. It is a dreadful indictment of the Government-and, indeed, their epitaph-that they have buried our finances under a mountain of debt. They have totally failed to manage the British economy in anything like a responsible manner. The very notion of a Bill on fiscal responsibility flies in the face of everything that they have done.

William Cash: Let me finish my reply to the hon. Member for Luton, North (Kelvin Hopkins).
	It is not that we Conservatives do not think that cuts are necessary, because we know they are. However, we emphasise that the fiscally and economically literate and responsible course to adopt is to engage in policies that will generate growth. It is only through the growth of small, medium-sized and bigger business that we will be able to find the money to pay for the public expenditure and resources-health, education and other things-that the British people will, quite rightly, be voting on. Without that growth, it will not be possible to have those things.
	If the Government try to rig and distort the economic data on which economic judgments are made, for the reasons my right hon. and hon. Friends and I have given, we will not get the true picture. Therefore, we will end up with greater public expenditure problems, because we will not be facing the truth. It is essential that we do not put all our emphasis on theoretical rubbish such as stability and growth pacts, which have been broken in every country in Europe, subject to sanctions that nobody has ever applied-that is all Euro junk. Rather, we must have an absolutely crystal-clear assessment, on proper accounting principles, of what will enable our economy to function efficiently, with real fiscal responsibility, and not a piece of paper and the vague rubbish with which we are dealing. We must have real bottom lines, accounting principles and responsibility.

William Cash: The hon. Gentleman is absolutely right. I could not emphasise that more strongly. What my right hon. Friend and I have been saying about debt is directly related to our credit ratings. If we lose that status in the international bond market, we are in very dangerous waters. That is why it is so essential that the underlying truth of the overall debt-net debt-is explicit, that we concentrate on it, that we get the figures right, and that we tell the British people the truth.
	The 2009 pre-Budget report, which sets out the Treasury's forecasts, is the basis on which our economy is being run, but it is like "Alice in Wonderland", as my hon. Friend the Member for Chichester said. The crucial point is that public sector net borrowing is forecast to peak at 12.6 per cent. of GDP in 2009-10 before falling in every subsequent year, reaching 4.4 per cent. in 2014-15. The crucial point is that public sector net borrowing is forecast to peak at 12.6 per cent. of GDP in 2009-10 before falling in every subsequent year, reaching 4.4 per cent. in 2014-15. Of course, Labour will not be in government then-at least, I sincerely trust that it will not. The public sector net borrowing-based on those invented figures, which bear no relationship to the truth of the economy and are certainly not fiscally responsible-for 2008-09 is shown as 6.6 per cent of GDP or £95 billion, which jumps to £177.5 billion or 12.6 per cent. of GDP in 2009-10, which is the general election year. For 2010-11, the figures are almost the same and then-dramatically, as if to try to convince the British people, although they are unlikely ever to read this garbage-they fall suddenly to 9 per cent., then to 7 per cent., then to 5 per cent. and finally to 4 per cent. by 2014. That is a Houdini-style attempt to try to prove something that simply cannot be proved.
	According to the Government's figures, they will pledge to halve public sector net borrowing from £177 billion in 2009-10, without any reference to the actual performance of the economy, the facts or the figures, to £82 billion. However, the Government's difficulty, as my right hon. Friend said, is that the actual figures are dramatically more. He rightly mentioned Network Rail, the public sector pensions, which will cost £1 trillion, and nuclear decommissioning. The latter figure has not yet been identified, but we know that it will be substantial, especially if we go down the nuclear route, as we will have to do for the sake of our energy supply. Then there is the whole question of the bank borrowing.
	So for 2008-09, net borrowing as a percentage of GDP is shown as 6.6 per cent. or £95.1 billion, but the actual amounts of net debt are £617 billion or 43.9 per cent. of GDP. We are told that the source of the Government's figures is the ONS, but a note is added that says that the figures exclude
	"the...effect of...financial interventions".
	Imagine if company accounts were written up in the same way, for example, by Cadbury, which is owned by sort of cousins of mine. It was a fantastic company for many years. Indeed, it has been a bad week, because the Abbey National, which was founded by my great-grandfather, has now had its name excised and is called Santander. Now Cadbury is disappearing. I do not know what is happening to this country, but many sound businesses, through which we have prospered for generations, seem to be in trouble. But that is nothing compared to the trouble of this Government.
	By excluding these so-called financial interventions, the Government are presenting a completely distorted picture. I challenge the Minister to deny that. I have asked other Treasury Ministers, including the Chancellor of the Exchequer, and the Prime Minister, if they can give us a definition of net debt and come clean on the total borrowing by this country. Financial interventions seem to mean lying to the British people about the real level of debt, so we cannot possibly endorse this Bill. It is not fiscally responsible: it is fiscally irresponsible.

Mark Todd: How kind of the right hon. Gentleman to say so. Others have judged otherwise, though.
	I shall turn to the historical backdrop to the elements in the clause. Others have referred to the fiscal rules of the late 1990s, which stayed in being until the onset of the crisis. As has been accurately described by the hon. Member for Chichester, those rules were first tweaked and bent to show apparent continuing adherence, and then abandoned when the crisis hit full force. The question of why the rules were there in the first place touches on part of the reason why we are having this debate now. First, there was a short-term political issue: the first Labour Government for 18 years needed to produce some evidence of solidity and a framework for decision-making that could reassure outside observers about how they would behave.

Ian Pearson: I want to address the points about pace and flexibility before I give way again. First, however, I want to respond to some of the comments made by the hon. Member for Stone (Mr. Cash)-and, indeed, by the hon. Member for Braintree (Mr. Newmark)-about Government accounting. I shall not go into a huge amount of detail, as the issue is not directly relevant to the clause. As is well known, however, following our moves towards a system of resource accounting and budgeting, we have been operating in accordance with new international financial reporting standards. We also report under the Maastricht treaty-the hon. Member for Stone does not like the treaty, but we have a legal responsibility to report under it-using the ESA95 rules. There are differences between those rules and international financial reporting standards. Rather than trying to put the two together and say that there can be only one right set of accounts, we should ensure that there is proper transparency and that information is available. so that those who examine these matters closely can understand what is going on. The hon. Member for Stone referred to public sector net borrowing. It is defined in the code for fiscal stability. A revised code was published yesterday, a copy of which is in the Library of the House.
	Finally, let me deal with the question of whether financial interventions should be included in the Government's accounts. I ask the Committee to consider for a moment whether it is realistic to include all the assets and liabilities of Royal Bank of Scotland in the Government's accounts, perhaps on a line-by-line basis, or whether it is better to treat them as a separate entity. When I was running an investment company with investments in a range of companies, I found that, if one owned more than 50 per cent. of the shares, line-by-line consolidation produced a very distorting picture of the overall financial position of the organisation.
	I believe that clarity and transparency are important, and we in the Government are very clear about what we are doing. We expect the financial interventions that we have made to be temporary. We have no desire to own Royal Bank of Scotland for a long period; we want, over a sensible period and when it means value for the taxpayer, to divest ourselves of our stake in it. It simply does not make sense to take some of the actions that Opposition Members have suggested in terms of accounting treatment, and the same applies to pensions. My hon. Friend the Member for South Derbyshire (Mr. Todd) made several good points in rebutting some of the arguments advanced by the hon. Member for Braintree.
	We can probably argue about different definitions of national accounts until the cows come home. What is important is proper transparency, enabling those who examine financial accounts under different accounting conventions to understand what is going on. These matters can be quite confusing for the public. However, it is important for us to meet our legal commitments under the Maastricht treaty by reporting under the ESA95 rules, and also important for us to apply international financial reporting standards.

David Gauke: This has been a useful debate, and I thank the following right hon. and hon. Friends for their contributions: my right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friends the Members for Chichester (Mr. Tyrie) and for Stone (Mr. Cash) for their speeches, and my hon. Friends the Members for Sevenoaks (Mr. Fallon) and for Braintree (Mr. Newmark) for their interventions. It is also noteworthy that, clearly after the Government Whips had trawled through the Tea Rooms and the Palace in general, we have had a contribution from the Labour Back Benches. However, in the speech of the hon. Member for South Derbyshire (Mr. Todd), his thoughtfulness, as always, got the better of him, and his remarks were hardly the ringing endorsement that the Government would have wanted. To paraphrase his argument, what he said was, "I'm not sure this Bill will ever become legislation, but it does at least give us an orderly process for discussing the matter." That is a reasonable point, but I am not sure that the big moment the Government have been waiting for was a Back-Bench Member speaking in support of the Bill in such a fashion. There have also, of course, been a number of other Back-Bench contributions questioning the Government's proposed policy, such as that from the hon. Member for Luton, North (Kelvin Hopkins).
	I shall not enter into a wider debate about clause 1, as we will have opportunities to exchange selective quotations again when we move on to a future group of amendments. I shall, however, talk briefly about the Minister's remarks. I am grateful for two points that he made. First, he accepts that all political sides agree on the need for automatic stabilisers. Sometimes, Government Ministers-and in particular the Prime Minister-are less careful in their characterisation of Opposition policies than the Minister, and it is right that he said that. It is also welcome that the Minister displays a degree of honesty as to the difficult future choices the country faces; at least there was none of the "cuts versus investment" nonsense that has so characterised the Prime Minister's utterances on this matter over the last few months.
	On fiscal targets, the Minister made the point that Ministers should be accountable to the House, which raises the question of why we need to put all this in legislation in the first place. It is entirely otiose-to use a word of which the Minister is fond-to do this. He also fully accepts that the structural deficit is a valuable measure, but he brings into question certainty in that regard. This Government have, of course, relied on cyclical measures for most of the time that they have been in power, and I know that that it is not necessarily the strongest argument in favour of cyclical measures and targets, given how they were abused. However, the Minister did not say anything that got to the heart of amendments 1, 2 and 3, which is that, even if we accept that there is a need for a straitjacket-which we do, although we are doubtful about the need for a legislative straitjacket-it is important that we have the right straitjacket. This is the wrong straitjacket. Given that the Chancellor has said that if there was another banking crisis, he would just have to come back to the House and ignore the Bill, it does nothing for the credibility of these targets, and the Government's policy on the deficit, to have in place the wrong measure.
	I remain confused about the Minister's argument that our proposal suggests cutting the deficit more slowly than the Government propose in both cases. He referred particularly to amendment 2, which relates to subsection (2). We end up with the relevant measure of borrowing by 2014 being half of what it was in 2010. I look at the numbers in the pre-Budget report, and the Government's projections show public sector net borrowing falling from 12 per cent. to 5.5 per cent. and the cyclically adjusted PSNB falling from 8 per cent. to 3.6 per cent. The ratio of those numbers in both sets is almost identical, so I do not think that that is right. It enables the Bill to take into account economic growth and the economic cycle. If economic growth turns out to be faster than the Minister anticipated, it would mean reducing borrowing by even more, and there will be scope to do so.
	Clause 1 misses the main target and nothing that the Minister said today addresses that. I say to Labour Members, some of whom, I hope, will have listened to the debate, that ours is a more sensible and pragmatic approach. Let there be no doubt that we are very serious about the deficit and we think the Government are taking too long to address it.
	In conclusion, I intend to press amendment 1 to a Division. Were that to be successful-on the balance of the debate in the Chamber, it should be-I shall press amendments 2 and 3. For the moment, I shall press amendment 1 to test the mood of the Committee.

Jeremy Browne: The hon. Gentleman makes a slightly different point-he is talking about the timing. As there is a reasonable consensus in the Committee, including all but one or two Labour Members, that we would like the deficit to be lower than it is at the moment, the debate ends up being about timing, rather than whether we aspire to cut the deficit.
	There is a range of views on timing. For what it is worth, the Liberal Democrats' view is that it should not be political-it should not take account of the requirements of a general election campaign in the next few months. We need to bear in mind a range of economic factors, including Britain's credit worthiness and unemployment, before we can make meaningful decisions about the appropriate speed with which to reduce the deficit. On that basis alone, we are uncomfortable with, and opposed to, this legislation, leaving aside the Alice in Wonderland nature of the deliberations.

David Gauke: It is a pleasure to speak on this group of amendments, which essentially brings together various ways of delaying the Bill's implementation and assessing it in the light of various matters. The hon. Member for Taunton (Mr. Browne) set out his thinking behind amendments 4 and 5, and I will say a word or two about that in a moment. The grouping also includes new clause 16, tabled by the hon. Member for Dundee, East (Stewart Hosie), and new clause 1.
	Amendment 4 proposes to delay the operation of the Bill. I have much sympathy with the thinking behind the amendment as it was set out by the hon. Member for Taunton, although I am not entirely sure whether it would necessarily work as he would like and allow the disapplication of the Bill for a year. I will be interested to hear what the Minister has to say about that. I was confused by the words:
	"beginning with the coming into force of the order."
	Given that the targets and duties set out in the Bill will not apply immediately, I am not sure how effective that would be. Perhaps that can be clarified during the debate.
	On amendment 5, I have a lot of sympathy with what the hon. Member for Taunton said about the need to review the accuracy of the forecasts provided by the Treasury in recent years. That was a well-made point. I suspect that the Minister will say in response to many of the hon. Gentleman's remarks that the recession threw everything out; that borrowing therefore rapidly increased; that we did not anticipate the recession, or at least the depth of the recession; and that that is why we are in this position.
	The problem, however, goes deeper and goes back further. It is worth noting the various budget estimates of when the country would next have a balanced budget. In 2003 it was estimated in the Budget that we would have a balanced budget by 2005; by 2004 that had moved to 2007; in 2005-I do not know whether this is a coincidence, but that was the pre-election Budget-the estimate was still 2007; by 2006 it had moved to 2008; by 2007 it had moved to 2009; and by 2008 it had moved to 2011. And that was before we started to get into the real horrors of the recession and the significant downgrading in the 2009 projections.
	Robert Chote, of the Institute for Fiscal Studies, put it nicely when he described the Treasury's record on projections of public finances as
	"a sustained display of conviction forecasting".
	There is a long-standing inaccuracy, and it all goes the same way. As far as the public finances are concerned, the Treasury has consistently underestimated the scale of borrowing and consistently taken an optimistic approach.

David Gauke: I am choosing my words carefully. I do not have the evidence that that has happened, but there have been various media reports-I am not going to list them all here-that it has happened. We are not talking about the Office for National Statistics; these figures are produced, as I understand it, directly by the Treasury. If the Minister could address that particular point, we would all be happy. I am not claiming to be bringing evidence of this to the House, but I think that it would be helpful, given that this discussion does exist, if it was addressed.
	New clause 1, tabled in my name and that of my hon. Friend the Member for Rochford and Southend, East (James Duddridge), deals with consultation on the Bill. It is worth reminding the House of the purpose of the Bill. It is to provide greater credibility for the Government's fiscal policy. It was published at the time of the pre-Budget report, and it represents a policy that was heavily flagged at the Labour party conference last autumn.
	The intention behind the Bill is clearly to persuade those who lend to this country that it is a fiscally responsible country, and that the Government are a fiscally responsible Government. If the Bill is worth having, it might be worth knowing whether the argument is succeeding and whether those who are supposed to be persuaded that the Government will be fiscally responsible are, in fact, persuaded. The current evidence suggests that they are not persuaded. If I may, I shall provide a few quotations. The Minister is entitled to say that they are selective, but as we agreed earlier, all quotations are selective.
	William Buiter, a former member of the Monetary Policy Committee, has said:
	"Fiscal responsibility acts are instruments of the fiscally irresponsible to con the public."
	Michael Saunders, one of the City's leading economists, has said:
	"the government's plans for legislation to cut the deficit are not convincing and are probably just camouflage-a sort of 'fiscal figleaf'-for the lack of genuine action".
	Richard Lambert, the head of the CBI and also a former member of the Monetary Policy Committee, has said of the Bill:
	"it's...like...saying I'm going to join the gym and that means I'm fit already."

Jeremy Browne: Was not the hon. Member for North Ayrshire and Arran (Ms Clark) talking about two separate issues? There is a discussion to be had about Britain's creditworthiness and about whether the Conservative party is talking down our economic recovery prospects, but that bundle of issues is completely separate from the issue of whether a Fiscal Responsibility Bill is desirable.
	It is possible to decide to be fiscally responsible without the need for a Fiscal Responsibility Bill, and it seems to me that it is desirable to be fiscally responsible, although not in the way that the Conservatives suggest. I believe that we, as a country, need to demonstrate a desire and an ability to get to grips with the deficit. However, the question of why on earth the Treasury needs to establish a legal framework rather than just getting on with doing the job that they are paid to do is completely separate from that.

Katy Clark: The hon. Gentleman referred to the Fitch report that has just been published. Does he accept that it also acknowledged that the UK has exceptional access to long-term financing and that the UK started from a lower debt base than most triple-A rated countries?

Stewart Hosie: It is instructive that 18 new clauses and 21 amendments have been tabled to this six-clause Bill. That speaks volumes for the attempts made by all parties to make this hopeless Bill into something that is useable and desirable and that might deliver some end result from whatever perspective people look at it. Many more of my amendments and new clauses are in the next group, so I shall be brief on new clause 16. I shall also keep any general remarks for the debate on Third Reading, if we have time for one, as I hope then to catch Mr. Speaker's eye.
	New clause 16 is specifically concerned with commencement. It is extraordinarily important that, before any duties imposed by order by the Treasury on the Treasury are carried out, there is absolute clarity about their impact, particularly on GDP growth and, frankly, public services and jobs. It is important that that should be in the Bill, because the Government, in the shape of the Chief Secretary to the Treasury, have failed to give us the information that we have asked for in previous debates, not least in the debate on the pre-Budget report on 7 January. He was asked questions that were directly related to the impact of the measures in this Bill and the duties that will be imposed to achieve the swingeing cut of £40 billion in 2013-14. The hon. Member for Croydon, Central (Mr. Pelling) asked
	"what is the estimate of the reduction in economic growth that will result from the proposed reductions in spend in the pre-Budget report?"
	The Chief Secretary replied:
	"The growth forecasts that we have set out are the basic answer to that question."
	He said that, of course, there was
	"a degree of uncertainty about the future path of growth for our economy",
	and so on, and so forth. Of course, the basic answer to the question asked by the hon. Member for Croydon, Central was not the growth forecasts that had been set out-they are, if they are to be believed at all, the result of the combination of all the measures announced over a number of Budgets and pre-Budget reports that will impact on the total public finances in the next few years.
	I followed up the hon. Gentleman's question by trying to get more out of the Chief Secretary. I asked him if he could
	"tell the House what the suppression of gross domestic product growth will be as a result of £57 billion being taken out of the economy-£20 billion as a result of tax rises and £40 billion as a result of spending cuts."
	He replied:
	"I am trying to avoid taking the House through what would be a quite complicated economic equation, which no one will be surprised to hear I have not brought with me this afternoon. The hon. Gentleman is looking at only one side of the argument."-[ Official Report, 7 January 2010; Vol. 503, c. 303-4.]
	I have no doubt that it would have been a complicated formula, but I suspect the answer would have been very straightforward. The Chief Secretary ought to have been-and I hope that tonight the Minister will be-in a position to say that removing £40 billion from the economy by 2013-14 will result in suppression of GDP growth of 0.25 per cent. or 0.5 per cent., or perhaps that the formula reveals that that is the right thing to do and that that action alone will have a positive impact on GDP growth and jobs and services, although, frankly, I doubt that.

Stewart Hosie: That is absolutely right, and it is the fundamental case that I am trying to make. Nobody believes this Bill will deliver anything. It will not deliver the degree of fiscal consolidation the Conservatives want, and in my view it goes far too fast and far too deep and risks economic recovery-and in so doing risks making the task of tackling the deficit and then the debt more difficult. The Bill therefore satisfies nobody. We should at least have information in advance that enables us to determine whether the duties that the Treasury wishes to impose on itself are even sensible.
	The big picture is that the 2 per cent. increase in Government consumption last year provided the stimulus to the economy, while household consumption was down 3.5 per cent., business investment was down 22 per cent. and gross fixed capital formation was down 17 per cent. We may reach the technical end of a recession, but growth will be slow, faltering and fragile, and there will be huge risks, particularly from unforeseen shocks, which could occur at any time. I am certain that, before the Government take any action that could weaken the economy or its ability to recover, they must provide a proper assessment of the impact on GDP growth of the actions that they intend to take.

Ian Pearson: I think that it was Francis Bacon who talked about dreams and predictions being subjects only for a chat by the fireside, so I do not want to get into the differences between the two. What I do want to say is that forecasting is not an exact science; it is particularly prone to error when there are major global shocks, as we have seen over the past couple of years, so it is not surprising that the Treasury's forecasts, along with all other forecasts, have not proved accurate.
	As the Chancellor said, the Government are cautious but confident about growth, and that assessment of growth has been used when judging the appropriate pace by which to reduce the deficit. We have discussed the appropriate pace before, and the Government want to ensure that the recovery is locked in. I believe that the economy is growing as we speak, but we do not want to jeopardise it. If we take action too early, we could put in danger the recovery that I believe is taking place this year.
	If growth proves stronger than we are currently forecasting, the priority should be a further reduction in structural borrowing. The Bill allows for that by setting fiscal ceilings, not floors, and it sets targets that the Government judge appropriate, because it is deliberately drafted to allow for overachievement. The ceilings are binding and designed to provide certainty that the Government will deliver their consolidation plans.
	It is worth noting that, subject to making progress on reducing borrowing every year, there is flexibility in the profile over which the deficit is halved by 2013-14. As I said earlier, there is the flexibility to accommodate lower growth and the greater impact of the automatic stabilisers so long as progress is made on reducing borrowing. It is important to recognise that.
	The issue is not just about economic growth. The hon. Member for Taunton pointed out that significant shocks to the public finances could come from a natural disaster or other actions, and my general point is that, in extremis, the Government would have to come back to Parliament if it were necessary to amend the targets in the Bill. However, the Bill has been designed so that, rightly, the duties in clause 1 can be changed only through new primary legislation. That is a higher hurdle than the procedure in his amendment; and our approach allows for greater parliamentary scrutiny than his amendment, which would make it a lot easier to disapply the duties.
	We think it right and proper that new primary legislation should be required in order to divert from the course set out in the Bill. The difficulty and seriousness of doing that should underline the Government's commitment to meeting the Bill's targets. I agree with the hon. Member for Taunton that it is important to consider alternative circumstances and scenarios. However, his amendment would make it too easy to change the targets when it is important that they are seen by everyone to be hard targets that could be changed only by going through the full parliamentary procedures required for new primary legislation.
	Amendment 5 is the first of three amendments that would require the Treasury to produce a report before commencing certain parts of the Bill. It seeks to impose on the Treasury a requirement to lay before the House a review of the accuracy of recent forecasts. I understand the comments that have been made by the hon. Member for Taunton-I have referred to some of them-and by the hon. Member for South-West Hertfordshire. I accept, of course, that it is important to account for past forecast differences and to explain them in an open and transparent way; that is why, since 2002, the Treasury has published an end-of-year fiscal report. That report is underpinned by the provisions of the code for fiscal stability, which require the Government to provide an indication of past forecast errors for public sector net borrowing. The report provides retrospective reporting and analysis of fiscal issues, and it builds on the information that is already available and published in the Budget and the pre-Budget report. It is a comprehensive analysis of forecast performance, and many fiscal commentators find it a useful source of information. In addition to the regular analysis of changes from forecast to outturn in the end-of-year fiscal report, each Budget and PBR analyses changes from forecast to forecast made at the previous fiscal event and provides a discussion of these developments. A lot of information is available out there on a regular basis. The Treasury reviews the accuracy of its forecasts, in the way that I have outlined, and its forecasts compare well with those of other forecasters such as the OECD, the International Monetary Fund and the European Council. The amendment is therefore unnecessary.
	New clause 1 would require the Treasury to carry out consultation on the Bill and to lay before Parliament a summary of the responses. I do not believe that that is necessary. We have already set out and explained our consolidation plans on more than one occasion. At Budget 2009, we clearly set out fiscal plans to secure sound public finances. At that time, the fiscal judgment was to more than halve borrowing to 5.5 per cent. of GDP in 2013-14. That judgment was confirmed in the PBR forecast, and through powers in the Bill it has been put into legislation. The path for consolidation has remained stable, and it has been public for some time. There has been significant discussion of these plans by financial commentators; and indeed, many discussions have been held in this House. A range of views have already been expressed. We have heard lengthy quotes from the hon. Member for South-West Hertfordshire and from a wide range of stakeholders.
	There are already mechanisms in place that allow for the policy to be scrutinised. In particular, after each Budget and PBR the Treasury Committee takes evidence, not only from Treasury Ministers and officials but from expert witnesses. The Treasury also receives a large number of representations in advance of each PBR and Budget. Introducing a late-stage consultation process and similar requirements would risk creating unnecessary uncertainty about plans that have already been extensively discussed and are in the public domain.

The Committee divided: Ayes 203, Noes 276.

Stewart Hosie: I hope to speak to the amendments and new clauses in a fashion that makes sense in the short time available. Apart from amendment 6, which I shall describe separately, this is a package of amendments and new clauses that seeks fundamentally to replace the duties that the Government sought to impose on themselves with a set of principles, according to which the deficit and then the debt would be tackled and reduced.
	Amendments 9 to 14 would amend the section on progress and compliance reports to align them with the principles that I have set out in new clause 14. Amendment 15 would remove the requirement to report on the duties in clause 1(3), as I am seeking to replace those duties with principles. Likewise, amendments 16 and 17 would remove references to "duties in section 1". New clause 15 would allow duties to be imposed, but only in so far as they are framed with reference to the principles set out in new clause 14, which is the key new clause, as it lays out the principles that I believe should be adhered to, rather than having the arbitrary political dividing lines, cuts and time scales-the straitjacket to which others have referred-set out in the Bill.
	However, before I address that point more fully, let me briefly describe amendment 6. It was tabled with the purpose of preventing the Government from taking any action or imposing any further duties-or damaging cuts, as we call them-if the principles of fiscal responsibility set out in new clause 14 are already being adhered to. In a sense, amendment 6 is a stand-alone amendment. Because of the way in which amendments can be debated and called in this place, it made sense, if I chose to push it to a vote, to table it in such a way that it could stand alone.
	The key provision in the group, however, is new clause 14, and that is what I should like to concentrate on. It contains five principles, which, as I said on Second Reading, are closely based on the principles that the New Zealand Government introduced in their Fiscal Responsibility Act 1994. The first principle is about reducing debt to a "prudent level". It is important that we should allow the Government of the day to specify what is or is not prudent, depending on the circumstances that they face. There must be a degree of flexibility, which is a theme running through all our debates today.
	The second principle says that once debt is reduced, the Government should
	"maintain a balanced budget on average over the medium to long term."
	That would not prevent any Government from implementing the steps that they believed were necessary to achieve the long-term objective of having a prudent level of deficit and prudent debt levels, but it would mean that that would happen, on average, over the medium to long term, rather than arbitrarily specifying one economic cycle or one Parliament, which is what the Bill does and what everybody in the House-and, I suspect, everybody viewing this debate from the outside-knows is simply an artificial dividing line.
	The third principle says that the Government should
	"achieve and maintain a level of net worth that provides a...buffer against unforeseen future factors."
	That point is vital and takes us back to our earlier debate about how the Government will use the statistics to measure their performance. They have talked about public sector net borrowing and public sector net debt, or PSNB ex and PSND ex, and state in the draft fiscal stability code that that
	"excludes temporary effects of financial interventions but accounts for any permanent costs to the taxpayer."
	It is right and proper that any Government should pay attention to the totality of the economic circumstances.
	The fourth principle calls on the Government to "manage fiscal risks prudently". That is common sense-one would not have imagined that we needed a piece of legislation to do that, but then nor would one have imagined that we needed a fiscal responsibility Bill to tell the Government that the deficit and debt levels are too high. The fifth principle is that the Government must
	"pursue policies...consistent with a reasonable degree of predictability about the level and stability of tax rates".
	That is incredibly important, because the tax system, tax rates and tax certainty are a vital component of fiscal stability and fiscal responsibility.
	Those principles are important, because we need to have a prudent level of debt, as well as a prudent level of deficit, which feeds the debt. However, they might vary depending on the circumstances, and the flexibility that I have described will almost certainly be required.

Ian Pearson: I am grateful to the hon. Member for Dundee, East (Stewart Hosie) for tabling the amendments, because I think it important for us to debate the framework of the Bill. As the hon. Gentleman explained, his amendments seek to replace the target-based duties in the Bill with duties to comply with broad principles very similar to those used in the New Zealand Fiscal Responsibility Act. In general, those principles relate to prudent management of the public finances. There is then the flexibility for the Treasury to impose further duties on itself, framed by reference to the principles. The amendments would also give Ministers power to disapply the targets in clause 1. Legislative principles are, of course, useful. That is why the Government already have a set of them; they are enshrined in the Finance Act 1998, and underpin the Government's fiscal policy and framework.
	I believe that specific quantitative targets for deficit and debt reduction are most helpful to supporting consolidation at the present time. Those targets will deliver the Government's objectives in a manner that accords with their principles. As I explained earlier, the Government have set out their key principles in the Finance Act 1998 and the code for fiscal stability. A revised version of the code was published yesterday, and copies are available in the Library. Those key principles are stability, transparency, responsibility, efficiency and fairness. Section 155 of the Act states:
	"It shall be the duty of the Treasury to prepare and lay before Parliament a code for the application of the key principles to the formulation and implementation"
	of fiscal and debt management policy, and the code for fiscal stability states that the Government shall conduct their fiscal policy in accordance with those principles.
	Let me briefly run through each of the principles that the hon. Member for Dundee, East outlined. I think it is possible to demonstrate that the Government's framework, strengthened by the Bill, covers each of those principles

Ian Pearson: I hope my hon. Friend will not mind my not giving way to him again, because I wish to conclude and give the hon. Member for Dundee, East (Stewart Hosie) the opportunity to reply to the debate.
	The Government's plans do not involve consolidating too soon, and we believe that putting firm quantitative targets in legislation is the right approach in the circumstances. It is, as I have said, in line with what other countries are doing-Germany being a good example. I do not disagree with the hon. Gentleman's view that we need to have principles but, as I hope I have explained, in our code for fiscal stability and our approach, the Government are following those principles. However, we wish to build on them with quantitative targets, as we believe that that is the right thing to do in the circumstances. Given that explanation, I hope that he will be able to withdraw the amendment.

The Committee divided: Ayes 201, Noes 266.

Ian Pearson: I beg to move, That the Bill be now read the Third time.
	I thank all hon. Members who participated in the Committee stage today. The Bill is short, and we have had sufficient time to scrutinise its key provisions.
	As we debated on Second Reading and in Committee, the Government have set out consolidation plans to halve the deficit over four years and put debt on a downward path. The Bill places obligations on the Government to cut the deficit at an appropriate and sensible pace, as well as allowing us to protect the economy and maintain key public services.
	Every country has been hit by a severe financial crisis, resulting in the worse global economic recession for decades. That has had a profound impact on the public finances and resulted in a significant increase in Government borrowing and public sector net debt. We have had to be responsible but flexible in the way in which we have dealt with those changing circumstances. That is why the Government provided a fiscal stimulus to support the economy and help people and businesses-a measure that the Conservative party opposed.
	Of course, there were costs to stepping in, but not allowing borrowing and the deficit to rise to help people and businesses would have meant greater pain and more job losses. However, the Government have always made it clear that support for the economy must be followed by steps to rebuild our fiscal strength. It is our judgment that tightening fiscal policy too much in 2010-11 would risk the recovery and be likely to cause the fiscal position to deteriorate. We believe that the economy can support a more rapid tightening in 2011-12, and growth will help us reduce our borrowing and debt.
	As we look to the future, the Government believe that it is appropriate to strengthen the fiscal framework. Other Governments around the world are considering similar measures. The Bill enshrines consolidation plans in legislation. It requires the Government to have at all times a legislative fiscal plan, approved by Parliament, for delivering sound public finances, and places a binding duty on the Government to fulfil the plan.
	Some have claimed that placing those plans in statute is a distraction. As we have debated, legislation will provide certainty and stability for business, and the Bill will bind the Government, to ensure that they deliver the tough decision to more than halve the deficit over four years and get debt falling.
	The UK is not alone. As Governments throughout the world work together on the response to the downturn, many other countries are also examining their fiscal frameworks. Indeed, the International Monetary Fund has highlighted fiscal responsibility laws as a way of supporting fiscal adjustment by strengthening institutional arrangements. As I have said previously, Germany already has similar legislation on its statute book.
	The fiscal plan for delivering sound public finances must be approved by Parliament before it becomes law. As I said, the Bill places a binding duty on the Government to meet that plan. We believe accountability to Parliament is important. Giving Parliament that new scrutiny role in relation to progress and compliance with fiscal plans is innovative and new for the Government.
	I contrast what the Government are doing-we are willing and prepared to be open and responsible to Parliament-with the policies of the Conservatives, who want to set up an office of budget responsibility, which would, in effect, be an unelected quango. They would diminish the role of Parliament in such important decisions, but we do not believe that that is the right thing to do. Under the Bill the Government will be required, through regular progress and compliance reports, to account to Parliament for their actions. The progress reports, which will be produced alongside Budgets and pre-Budget reports, must set out progress that has been made toward compliance with the plans. If targets are not met, the Treasury must explain why not to Parliament.
	I think it right that that is the method of accountability. The Conservatives say that we could hive off economic forecasting to a separate office, while presumably relying on those forecasts, but who would be responsible if the forecasts turned out to be wrong? Who is to blame if policy is wrong because forecasts are wrong? Would it be the new office of budget responsibility or the Government? Why should Parliament not hold the Government to account for those actions? That is why setting up a new office or body and separating forecasting from policy consideration and delivery, rather than going down the legislative route that we have proposed, is the wrong way to go.

Ian Pearson: I will return directly to the Bill, Mr. Deputy Speaker.
	Our judgment is that it is better to engage in the necessary fiscal tightening from 2011-12 onwards, when all the predications say the economy is likely to be growing far more and we will be better able to make those necessary, difficult decisions. However, having said that, our fiscal consolidation plan extends from 2009-10 right through to 2015-16.

John McDonnell: I have sat through the debates all afternoon; I left the Chamber for only a short time. I hope that the House will forgive me if I intervene at this point, but my amendment was not reached. I think that that has now happened for about three days running, but never mind.
	The tragic irony for many of us is that there is a consensus across the main political parties that some of us do not share. That consensus is on the answer to the question: who is going to pay for this crisis? It appears from the consensual discussions that have taken place that the people who will pay for it are those who never contributed to it. It will not be the people who got the bonuses, or those who, through their reckless greed, brought the economy to a standstill and into crisis. Nor, to be frank, will it be the Government Ministers who, through their neglect and deregulation, allowed that to happen. As a result of this Bill, it will be ordinary working people who will lose their jobs.
	The level of cuts described in the  Financial Times interview yesterday involved a 17 per cent. cut across the board for Departments other than those covering health, schools and policing. On average, we can expect a 10 per cent. cut in jobs, which means 500,000 civil servants. The tragedy is that, in the very month in which the Government are announcing those cuts through this legislation, they are also bringing forward proposals to scrap the civil service compensation scheme, so the redundancy scheme will go as well. Large numbers of people will lose their jobs as a result of this economic crisis, which was not of their making. They will also lose the redundancy entitlements that they had been expecting and to which they signed up when they took their jobs in the public service.
	In addition, our communities will now be at risk of losing some of their essential services. We have already seen announcements in London this week about possible hospital closures. There was a lobby of Parliament today by Land Registry workers, 1,700 of whom are to be sacked, and 1,500 jobs are to go at Network Rail, which will put public safety at risk. This is all because there is consensus in this House that ordinary working-class people will pay for this crisis.
	Some of us think that there is an alternative. Yes, it would involve cutting some public services, but it is also about scrapping Trident and ID cards, and about getting rid of the waste of resources involved in privatisation and getting rid of all the consultants, on whom we spend hundreds of millions: £400 million alone was spent on the private finance initiative on the London underground. It is also about re-introducing a fair taxation system that would tackle all the avoidance and evasion and ensure that those people who have made such profits through their exploitation of the public services that have been privatised actually pay their way in our economy. Why are we so hidebound in trying to resolve this economic crisis within the four-year time scale that the Government have set for us?
	What we are asking for now is a planned economyno longer a casino economy.We need an economy that serves the needs of our people, rather than the current rush towards cuts, further privatisations and towards the creation of an economy that will enable the casino wheels to start spinning again. That is the debate that we should have had today, but instead we have had a surreal debate about a meaningless piece of legislation that will have no effect in the real world in terms of reassuring the markets in the long term, but will have a real effect in terms of cuts in public-
	 Debate interrupted (Programme Order, 10 January).
	 The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.